Millions Gone: Gamblers Lose Money Predicting New Pope As Polymarket Loses Its Luster

Bettors on crypto prediction platform Polymarket have built an impressive reputation for beating the bookies in recent months. But that confidence was shaken on Thursday when they appeared to be wrong about the outcome of the papal conclave.

The winner, Robert Francis Prevost, did not have the highest expectations; gamblers gave the US-born cardinal only about a 1% chance of becoming Pope Francis’ successor. In contrast to Prevost, Cardinal Pietro Parolin was the one that Polymarket gamblers had the highest expectations of, with a 28% chance of winning. With more than $28 million in bets on candidates other than Prevost, this resulted in a complete defeat for many gamblers.

This event raises questions about the perceived accuracy of markets like Polymarket compared to traditional opinion polls. Polymarket allows users to bet on the outcomes of everything from football matches to political elections. Unlike traditional betting platforms, which set the odds themselves, Polymarket’s odds are a real-time reflection of users’ bets. In short, the more demand there is for a particular outcome, the higher the odds and the prizes for bets.

In November, Polymarket gained national attention when gamblers Donald Trump gave much higher odds than other sources of winning the U.S. presidential election. “The prices on Polymarket seem to capture the views of savvy investors quite well,” Koleman Stumpf, an economics professor at Wake Forest University in North Carolina, told CoinDesk at the time, noting that Polymarket bettors appeared to have a slight edge in predicting the election outcome.

A historical data analysis by New York data scientist Alex McCullough showed that Polymarket had previously been able to predict global events with 90% accuracy, a feat now seemingly dwarfed by the recent error.

What went wrong?

The reason Polymarket bettors got the papal conclave outcome so wrong is because the event is extremely difficult to predict. Domer, one of Polymarket’s top bettors, told X that it’s like walking into a store that doesn’t communicate with the outside world. “Even the participants themselves probably wouldn’t know how to predict it,” he added.

Since it is difficult for punters to find an edge in such an esoteric bet, many likely followed the opinions of traditional betting markets and the media. This led to a strong similarity between Polymarket’s odds and other betting markets such as Betfair.

The rarity of papal conclaves may also have played a role. Pope Francis was appointed in 2013, years before blockchain based betting platforms such as Polymarket emerged. Many Polymarket bettors may not have previous experience betting on these events.

Political elections, where Polymarket’s odds are closer to the final results, are much more frequent and better understood. According to Domer, the real strategy when betting on the papal conclave is not to pick the right candidate, but rather to bet against those with too high odds. He questioned the high odds of popular favorites Parolin and Cardinal Luis Antonio Tagle, who were given a 20% chance, calling them “overpriced, and not for good reasons.”

Frequently Asked Questions

What is Polymarket?
Polymarket is a platform where users can bet on the outcomes of various events, from sporting events to political elections, with odds determined in real-time by user bets.

Why did Polymarket make a mistake with the papal conclave?
The difficulty of predicting a papal conclave and its rarity made it difficult for gamblers to make an informed guess, leading many to follow media opinions rather than their own analysis.

What can one learn from this event?
The case highlights that even a platform known for its accuracy, such as Polymarket, is not infallible and that the complexity of certain events, such as a papal election, can lead to unexpected outcomes.